ASEAN+3 Multi-Currency Bond Issuance Framework

Implementation Guidelines for the Philippines

• Editorial: Asian Development Bank
• Año: 2020
• ISBN:
  9789292620035
• Categoría: Business
• Categoría: Bonds

These guidelines explain the ASEAN+3 Multi-Currency Bond Issuance Framework (AMBIF) and relate AMBIF Elements to the corresponding features of the professional Philippines bond market. The guidelines highlight market characteristics that are significant for issuers and investors and review the regulatory processes required for issuing different types of debt securities. The guidelines are an output of the ASEAN+3 Bond Market Forum and were developed to enable bond issuers and their service providers to pursue further issuances under AMBIF with greater ease and certainty.

I AMBIF Elements in the Philippines

This chapter describes the key features of the ASEAN+3 Multi-Currency Bond Issuance Framework (AMBIF), also known as the AMBIF Elements, and puts into perspective the equivalent features of the domestic professional bond market in the Philippines.

A. Summary of AMBIF Elements

The bond market in the Philippines features many of the attributes of a professional market in the context of AMBIF, including the well-defined Qualified Buyers and Qualified Securities exemptions from full disclosure and related regulatory processes, and from existing registration and listing processes. Issuances to Qualified Buyers, which are generally referred to as QB bonds, together with enrollment on the Philippine Dealing & Exchange Corp. (PDEx), are presently deemed to best represent the intentions of the AMBIF Elements.

As a Securities and Exchange Commission (SEC)-registered exchange and SEC-authorized over-the-counter (OTC) market operator, PDEx operates the organized secondary market for the trading of fixed-income securities, which includes both government securities and corporate bonds and notes.

Table 1 identifies the features and practices of the domestic corporate bond market in the Philippines that directly correspond or are equivalent to the AMBIF Elements.

Table 1: AMBIF Elements and Equivalent Features in the Philippines

AMBIF Element	Description	Equivalent in the Philippines
Domestic Settlement	Securities are settled at a national CSD in each ASEAN+3 market.	PDTC is the depository and place of settlement for all eligible bonds and notes.
Harmonized Documents for Submission (Single Submission Form)	There is a common approach to submitting information as input to regulatory process(es) where approval or consent is required; appropriate disclosure information, based on an ADRB recommendation, needs to be included.	The Single Submission Form is acceptable but additional information and document(s) may be requested during the evaluation process, as necessary.
Registration or Profile Listing in ASEAN+3 (Place of Continuous Disclosure)	Information on bonds, notes, and issuer needs to be disclosed continuously in the relevant ASEAN+3 market. A registration or listing authority function is required to ensure continuous and quality disclosure.	Enrollment of bonds or notes on the PDEx Qualified Board is required, including continuous disclosure obligation by the sponsor under the Listing and Enrollment Rules; reference pricing for traded instruments is available.
Currency	Bonds or notes are denominated in one of the currencies normally used for issuances in the domestic bond market of an ASEAN+3 member.	Philippine pesos and US dollars
Scope of Issuers	Resident of an ASEAN+3 member	Philippine and nonresident regional issuers, in accordance with BSP regulatory processes based on type of issuer, residency, and currency of denomination
Scope of Investors	Professional investors defined in accordance with the applicable laws, regulations, or market practice in each market in ASEAN+3	QB concept—as per the Securities Regulation Code and provisions in the MORFXT, as may be applicable—which includes foreign institutional investors

ADRB = AMBIF Documentation Recommendation Board; AMBIF = ASEAN+3 Multi-Currency Bond Issuance Framework; ASEAN+3 = Association of Southeast Asian Nations plus the People’s Republic of China, Japan, and the Republic of Korea; BSP = Bangko Sentral ng Pilipinas; CSD = central securities depository; MORFXT = Manual of Regulations for Foreign Exchange Transactions; PDEx = Philippine Dealing & Exchange Corp.; PDTC = Philippine Depository & Trust Corp.; QB = Qualified Buyer; SEC = Securities and Exchange Commission; US = United States.

Source: ABMF SF1.

B. Description of AMBIF Elements and Equivalent Features in the Philippines

The market features in the Philippines that are comparable to the AMBIF Elements listed in Table 1 are explained in this section in greater detail.

1. Domestic Settlement

ASEAN+3 Multi-Currency Bond Issuance Framework

AMBIF is aimed at supporting the domestic bond markets of ASEAN+3 member economies. To be recognized as a domestic bond, an AMBIF bond or note needs to be settled at the designated central securities depository. Hence, domestic settlement is a key feature of an AMBIF bond.

Equivalent Features in the Philippines

The Philippine Depository & Trust Corp. (PDTC) is the designated central depository for equities and corporate bonds and notes. With the exception of a number of corporate notes that are not listed on PDEx, PDTC settles and provides safekeeping for all fixed-income instruments traded on PDEx. Both entities are subsidiaries of the Philippine Dealing System Holdings Corp.

2. Harmonized Documents for Submission (Single Submission Form)

ASEAN+3 Multi-Currency Bond Issuance Framework

Based on the review of actual offering circulars, information memoranda, and program information formats in ASEAN+3, it was recognized that most information was similar or comparable. Hence, a Single Submission Form (SSF)—a single format in English that can be applied to all of the relevant regulatory processes for bond or note issuance in each participating ASEAN+3 market—was proposed. The information contained in the SSF has been normalized based on the prevailing regulations in each participating market and therefore can be accepted by all relevant regulatory authorities and market institutions for their respective approvals or consent in anticipation of an AMBIF bond or note issuance.

Equivalent Features in the Philippines

In the Philippines, regulatory authorities and market institutions accept the SSF, though this does not preclude the possibility of additional information being submitted to the authorities if deemed necessary.¹ At the time of writing, the SSF was in the process of being updated to incorporate additional information required under the PDEx Rules.

Effective 9 November 2015, the filing of a Notice of Exempt Transaction (SEC Form 10.1) with the SEC is no longer required when a resident corporate issuer wants to issue bonds or notes to professional investors (Qualified Buyer issuances) in the Philippines. As a result, the pilot AMBIF issuance in the Philippines in October 2018 made use of the SSF as the key disclosure document to Qualified Investors and was submitted as a matter of record to the BSP.

However, corporate issuers still have the option to request for a Confirmation of Exempt Transaction from the SEC (see also Chapter III.D). This option was already available to issuers in the previous Implementing Rules and Regulations (IRR) of the Securities Regulation Code (SRC).

The use of English is prescribed in BSP and SEC regulations, including the provisions related to PDEx.

3. Registration or Profile Listing in ASEAN+3 (Place of Continuous Disclosure)

ASEAN+3 Multi-Currency Bond Issuance Framework

Information on the issuer and the bond or note needs to be disclosed continuously in ASEAN+3 markets. A registration or listing authority function to ensure continuous disclosure is required. This will also ensure the quality of information disclosure and help create a transparent, well-organized market for AMBIF issuances that is differentiated from ordinary private placements or exempt offers for which information is often neither available nor guaranteed. Owing to this important feature, an AMBIF secondary market is expected to emerge as the number of issuances increase.

A profile listing is a listing without trading. The objective of a profile listing is to make a bond or note visible and to provide more information to investors via a recognized listing place, particularly those investors with more restrictive mandates such as mutual and pension funds. A profile listing at a designated listing place can ensure the flow of continuous disclosure information and possibly even reference pricing in some markets.

Equivalent Features in the Philippines

In the Philippines, the listing or enrollment of a bond or note on PDEx covers listing and enrollment, as well as trading processes and practices, for debt instruments. According to the PDEx Listing and Enrollment Rules (7.2.1), a listing or enrollment is possible for debt instruments issued by either resident or nonresident issuers. A listing or enrollment of a note issuance program, such as a medium-term note (MTN) program, is principally possible. PDEx is in the process of implementing a framework for bank issuances (see Chapter III.F for details).

The listing or enrollment of bonds or commercial paper by banks or quasi-banks registered in the Philippines is subject to the PDEx Guideli...